Psychological research and the economy

• The Economy: The production and consumption of goods and services Psychology and the Economy: Psychological theories can are applied by governments and companies to improve how the economy functions, including: A psychologically healthy and well-educated population can be more productive, producing more and higher quality goods and services..
• The consumption of goods and services depends on a population able and willing to buy those goods and services. A psychological understanding and manipulation of desire (eg. effective advertising) increase demand. Generation of tax revenue that pays for public services depends on taxing income, which depends on people employed in producing and consuming goods and being convinced to pay their taxes!
• Maternal deprivation and the economy

  Maternal deprivation - Adoption: Research by Harlow (deprivation in monkeys), Bowlby (critical period), Ainsworth (attachment style), and Rutter (Romanian orphans) demonstrate intellectual, emotional and physical development can be negatively affected by deprivation early in a child's life. Influence on the economy: Midwives use the psychological knowledge gained about
• the developmental needs of young children when giving informed advice to expectant mothers. Hospitals have improved their policies around family visiting hours for young children and physical contact between mothers and children in the first hours of life. Adoption agencies prioritise quick placement of infants with loving families. These changes improve the development of children; this improves the economy as these adults are likely to be more productive adults, better adjusted to the demands of adult life, and less likely to need costly mental health support as adults.
• Social influence and the economy

  Social influence - Obedience and conformity: Researchers such as Milgram (obedience) and Asch (conformity) demonstrated how situational social pressures could influence an individual's behaviour. Organisations such as the government have used these findings to change the behaviour of their citizens. The nudge unit (The Behavioural Insights Team -BIT) is working within the UK government to apply psychological principles.
• Influence on the economy: the nudge unit working for HMRC sent letters to people who didn't pay their tax, these included statistics showing the majority of people paid their tax on time and made clear they were not part of this majority group; this was highly effective compared to a simple reminder. This project increased taxes paid within 23 days by more than £1.6 million. These projects improve the economy by increasing the amount of money available to the government to spend on other services.
• Conditioning and the economy

  Conditioning: Social media: Behavioural theories of classical (Pavlov) and operant (Skinner) conditioning explain how to shape and even change human behaviour.
• Influence on the economy: Social media and computer game companies can manipulate their users to engage with their products more by providing virtual rewards such as "likes", "followers", and "levels". These act as social rewards and result in compulsive use, this improves the economy as companies like Facebook can display more adverts, making more money. Extreme compulsive behaviour can result from variable ratio reinforcement, giving rewards on an unpredictable schedule.
• Variable ratio reinforcement is the same technique used by casino slot machines but has now been applied to random prize "loot boxes" in games aimed at children.
• Neurotransmitters and the economy

  Neurotransmitters-Drug treatments: The action and imbalance of neurotransmitters are linked to mental health conditions such as anxiety, depression, OCD and schizophrenia. Drug therapies can act on neurotransmitters, altering how they function in the brain and reducing symptoms,
• Influence on the economy: The development of cheap and effective drug treatments has allowed people to reduce symptoms and return to everyday life, including work. This improves the economy by reducing the cost to the NHS, improving workers" productivity at work and increasing the number of workers paying taxes.
• Memory and the economy

  Memory-justice system: Researchers such as Loftus have shown that memory and its use in eye witness testimony (EWT) in court have serious limitations. Cases that depend on EWT alone can result in miscarriages of justice due to misidentification. Police are now trained to avoid leading questions and post-event contamination. Some can conduct the cognitive interview, an interview system designed to use memory research to gain more accurate EWT and ultimately convict the person guilty of the crime.
• Influence on the economy: Memory research, when applied to the criminal justice system, improves the economy by reducing the cost of imprisoning people who do not belong in prison and by imprisoning people who are guilty and may otherwise go on to commit more crimes that may be costly (e.g. theft, fraud and killing productive members of the workforce)